The SR&ED T661(13): The Good, the Bad, and the Ugly

The Canada Revenue Agency (CRA) released an updated version of the T661—the form used to claim the Scientific Research & Experimental Development (SR&ED) tax credit.

While some of the changes made are improvements, others only serve to put the program in jeopardy. Here’s a look at the good, the bad, and the ugly for the T661(13).



The CRA has made noteworthy efforts to simplify the program in the last decade, the most significant of which was the introduction of the short-form T661 in 2008 (Revision 8).

The downside to the new form was that in terms of writing style and approach, the narrative was disjointed and the questions did not map clearly to what was being requested via the T4088, nor what was required in the policy documents. This has been clarified in the T661(13) and updated T4088.


The biggest criticism in the Innovation Canada: A Call To Action (2011) report was that as the single largest source of indirect funding for R&D in Canada, the SR&ED program had virtually no measurement criteria. This updated T661 was an opportunity to collect information that would help the CRA and the Department of Finance determine the efficacy of the program.  

As it stands, the only aspect of the program that appears to be measured is the days a file spends at the CRA and there are rumours that Tax Earned By Audit (TEBA) is still in use—although the CRA clarified their position, there has never been a case where the claim size has increased as a result of a review. The SR&ED tax incentive is a multi-billion dollar program, yet there is no evidence being collected to support its continued use.

If the CRA is in any way interested in keeping SR&ED under their purview, they will need to come up with clear measurement criteria on the effectiveness of the program.


The CRA has now introduced an extensive, highly detailed full-page section (Part 9 – Claim Preparer Information) that requests information on the relationship between the taxpayer and their SR&ED claim preparer.  This is now a required part of the T661 form and is subject to a $1000 fine if filled out incorrectly.   

While this is positive in theory—based on media assertions of fraud, system abuse, and exorbitant fees— it’s also a terrible idea. Here are a few reasons why:

  • It makes private matters public. A contract is a confidential document between two companies. These usually contain privacy and non-disclosure agreements.
  • Anyone who has access to the T2s beyond the CRA—the company’s accounting and/or auditing firm, for example—can see the fee structures. This could cause irreparable harm to independent and accounting groups when others (e.g., audit groups) review this sensitive information.
  • It singles out an industry group. Why not have accountants disclose their role on the T2s? How about the audit firms? If the government is concerned about the cost of compliance—which they are, based on their Red Tape Initiative—everyone should also be included.
  • The aftermath could be messy if companies feel their livelihood is at risk. Similar measures were taken in the United States, which resulted in the Internal Revenue Service (IRS) being sued. If the same were to happen in Canada, how much would that cost taxpayers?
  • It will cause infighting amongst private sector groups—already industry associations and private firms are starting to weigh in (“Should forced disclosure be allowed?” “Is your consultant charging too much?”). But perhaps that’s the plan—to create infighting.

The most negative impact of mandatory disclosure, though, is this: It’s a distraction. As mentioned above, the Innovation Canada: A Call To Action report correctly identified that there are no measurement tools currently in place to help quantify the economic impact of the SR&ED program and recommended “an outcome-driven and user-oriented approach to federal support for business innovation.” In spite of this, little to no information is collected regarding the SR&ED program—even though this is a critical aspect of many other R&D incentives (e.g., IRAP).

In this year’s Speech from the Throne, the government lauded their efforts “help[ing] Canadian business remain competitive while creating high-paying jobs.” Does the updated T661 uphold this mandate?

While we’re all focused on this new form, we may forget to keep our eyes on what should be goal—developing a streamlined, efficient program that benefits Canadian companies.